Arbitrators, Like Judges, Are Immune from Libel Lawsuits Based on Their Opinions

[UPDATE 12/5/2023: See the end of the post for links to, and an excerpt from, Seltzer's arguments.]

[UPDATE 4/17/2024: In March, the D.C. Circuit affirmed the dismissal on statute of limitations grounds, without having to reach the arbitral immunity question.]

From today's decision by Judge Jia Cobb in Seltzer v. Financial Industry Regulatory Authority:

Plaintiff Susan Seltzer participated in an arbitration proceeding before the Financial Industry Regulatory Authority (FINRA). The arbitration concluded with a written award that was published online. Seltzer alleges that the award defamed her by incorrectly describing her actions in the arbitration proceeding. She also contends that FINRA took actions to "tag" the award to her name in a Google search. Seeking to recover for the harms she allegedly suffered from the publication of those statements, Seltzer sued FINRA….

The Court can make out the following from Seltzer's allegations. The events giving rise to this case involve an arbitration Seltzer initiated in FINRA's arbitration forum in 2017. The arbitration panel issued a written award dismissing Seltzer's claim. The award included some descriptions of the arbitration proceedings and characterized Seltzer as acting "vicious[ly]" and making "ad hominem attacks" against other parties, among other things. Seltzer acknowledges that FINRA's Codes of Arbitration Procedure requires that it make all arbitration awards publicly available. Accordingly, FINRA posted the arbitration award online…. Seltzer knew about the statements as early as November 6, 2018 ….

Seltzer also alleges that on July 13, 2020, FINRA began "publish[ing] the false and defamatory award tagged to [her] name in a Google Search."  Seltzer does not clearly explain how she claims FINRA did this, but she seems to allege that FINRA was responsible for the award appearing in Google searches of her name. She alleges that in 2022, FINRA created "knowledge graphs" that also linked the "defamatory award" to her. Her Complaint includes allegations that FINRA altered the complaint that she filed in the arbitration by removing the names of certain individuals, but she does not allege that FINRA altered any allegedly defamatory statements in the award.

The court held that plaintiff's claims were barred by D.C.'s one-year statute of limitations for libel claims:

Seltzer tries to avoid the statute of limitations problem by alleging that FINRA somehow linked the award to her on the web, or otherwise caused the award to appear in Google search results for her name and business, in 2021 and 2022, well after FINRA first posted the award. Seltzer contends that by manipulating Google search results to "tag" the award to online searches that include her name, FINRA republished the defamatory statements (or caused them to be republished) and thus restarted the statute of limitations clock.

The Court disagrees. In the District of Columbia, the "single publication" rule governs the statute of limitations for defamatory statements. Under this rule, the statute of limitations begins to run on the date the statement is published or is "first generally available to the public." The statute of limitations does not restart simply because "[c]opies of the original" are made, as such copies are "still part of the single publication." However, the statute of limitations will restart if the statement is republished in a "a new publication" that is intended to "reach a new audience." Although this rule is most easily applied to traditional media, courts resolving claims for web-based defamation have found that "a statement on a website is not republished unless the statement itself is substantively altered or added to, or the website is directed to a new audience." …

Certainly, the statute of limitations does not restart every time that Seltzer performs a Google search and can pull up the arbitration award or other information about her. The award is available on the same online portal and has not been republished. Even taking Seltzer's factual assertions as true, she seems to describe Google's search engine operating as it normally does. There is nothing surprising or nefarious about Seltzer's allegation that when she enters "FINRA Awards Seltzer" into the Google search engine, the arbitration award and other results relating to Seltzer appear. And if the Court has misunderstood Seltzer's allegations, FINRA has not republished the arbitration panel's conclusions to a "new audience" simply because a third-party search engine brings up a previously published award when a user searches related key terms….

And the court held that FINRA was in any event protected by arbitral immunity:

"Judges, advocates, and witnesses" enjoy "absolute immunity" when acting in their official capacity "because of the special nature of their responsibilities" and because the "loser in one forum will frequently seek another, charging the participants in the first with unconstitutional animus" or other wrongs. Absolute immunity is thus "necessary to assure judges, advocates, and witnesses can perform their respective functions without harassment or intimidation." Courts in this District, in agreement with most circuit courts that have considered the issue, have extended this privilege to cover both individual arbitrators and arbitration forums because of their quasi-judicial nature.  The Court is persuaded by this precedent and finds that FINRA is immune from suit….

UPDATE 12/5/2023: You can read Seltzer's argument to the district court here, and her  appellate statement of issues here. An excerpt from the statement of issues, though you can read the entire filings (which also discusses the statute of limitations, arbitral immunity, and more) at the links:

IV. Tort of Defamation in the Digital Age

1. Misunderstanding of Google Tags and Defamatory Republication: Did the district court err in its understanding of the intentional use of Google tags by FINRA, failing to recognize their potential role in the alleged defamatory republication of content about Mrs. Seltzer, thereby reaching a new and broader audience?

2. Recognition of Defamation Evidence in Arbitration Award: Did the district court overlook clear evidence of defamation in the FINRA arbitration award against Mrs. Seltzer, particularly given email evidence that the removal of the Panel Chair was orchestrated by FINRA's Director of Arbitration, contrary to allegations of 'vicious' behavior by Mrs. Seltzer, thus indicating a known defamation perpetuated by FINRA through denying her constitutional right to be heard?

3. Negligent Dissemination of False Information: Did the Court err by not recognizing that the knowing dissemination of false information on digital platforms by an entity like FINRA might constitute negligence or reckless disregard, especially considering evolving public policy towards enhanced consumer protection and considering the significant harm imposed upon Mrs. Seltzer?

Note: Google tags, far from being incidental, are tools actively used in digital marketing and SEO strategies, potentially influencing the visibility and association of online content.

4. Active vs. Passive Dissemination Discrepancy: Did the lower court fail to differentiate between passive online availability and the active, intentional use of Google Tags linked to Mrs. Seltzer's name in disseminating the arbitration award, thereby misinterpreting the nature of the dissemination?

5. Violation of FINRA Rule 12904(h) Through Active Dissemination: Did the lower court neglect to address the violation of FINRA Rule 12904(h), originally intended for passive dissemination of awards, in the context of FINRA's transition to active dissemination methods, such as individual tagging for awards?

6. Incompatibility of FINRA's Actions with the Exchange Act: Given the SEC's approval of the public posting of awards to aid investor confidence, does FINRA's application of these postings, which has led to defamatory and harassing consequences for an investor like Mrs. Seltzer, contravene the intended spirit of the Exchange Act by creating a chilling effect on investors' willingness to file complaints against member firms?

Comments

[hoppy025]

Judges are immune for any liability, which is why they do what they do. For example, judges thumb their nose at Bruen, but when a company dares to sell a piece of metal, this ugly Jewish dyke appointed by Biden, Nina Morrison, is there to issue an injunction in favor of the government right away.

https://www.cnn.com/2023/09/05/politics/judge-temporary-injunction-machine-gun-conversion-device/index.html

[Michael Ejercito]

What does Jewish have to do with it?

[hoppy025]

Because all but the ultra-Orthodox Jews are reflexively and incorrigibly liberal. They hate white Christian America and everything it stands for, which is individual liberty and the idea that the rights of the individual should not be required to yield to the group.

Because of history, it's understandable as to why they feel this way, but it's incompatible with the traditional West, which is why they always seek to undermine it.

[Eugene Volokh]

You do realize that most of the regular posters on this blog, including me, (1) are Jews, (2) are not ultra-Orthodox, (3) are not reflexively and incorrigibily liberal, and (4) do not hate individual liberty, right?

[CJColucci]

You do realize that hoppy025 is immune to mere fact, don't you?

[hoppy025]

Yes, I do. But for every you, and for every me, there are 10 idiot Democrats.

I grew up with these people. I know these people. Their liberalism is a matter of faith for them. They cannot be convinced differently.

[Reallynotbob]

I suspect that's how they see your "white Christian America," too.

[Eugene Volokh]

hoppy025: According to Pew Research, about 23% of non-Orthodox Jews identify as Republican or leaning Republican, compared to 75% as to Democrats. That's not 10%, and it's not zero.

Now if you disagree with Biden-appointed judges, that's fine. But why then criticize a judge for being a Jewish Biden appointee (or a lesbian or for that matter someone who you view as being unattractive), as opposed to just a Biden appointee?

Also, how good-looking are most conservative federal judges?

[hoppy025]

To the extent that someone acts as though they're outside of America, and not part of it, their looks and demographics are important to the analysis.

[SomeGuy 2]

It's always great when judges have to figure out half a dozen different ways to professionally say that the complaint is incomprehensible. She also apparently forgot to include a copy of the arbitration award she's so irate about, but the Court considered it anyway (footnote 2).

Let's see here:

"The Court agrees with FINRA that there are many issues with Seltzer’s suit, but the Court grants FINRA’s Motion on the grounds most obvious to the Court"

"The Court also denies Seltzer’s various motions to amend her Complaint (ECF 19, 20, 29) because the proposed amendments do not cure the deficiencies of her suit or otherwise state viable claims"

"The Court can make out the following from Seltzer’s allegations"

"Seltzer does not clearly explain how she claims FINRA did this, but..."

"While it is difficult for the Court to make out the bases of Seltzer’s Privacy Act, Clayton Act, and “harassment” claims. . ."

[Bored Lawyer]

I think it is settled in federal courts throughout the land that if your complaint relies on a document but fails to attach it, the Court can look at it anyway. Otherwise, a clever plaintiff (or her lawyer) would quote only part of a contract and claim breach, holding back other parts that relieve the defendant of liability. Same for an allegedly defamatory news article; if you allege the defendant defamed you in an article, the court can actually read the article on a motion to dismiss.

[Kenneth Almquist]

The complaint says right at the top that the plaintiff was force to proceed pro se because FIRNA's libel damaged plaintiff's reputation to the point that no lawyer wanted to have anything to do with her. Somehow I doubt that.

At any rate, the complaint is fairly good for a pro se complaint. Plaintiff seems to have looked up the relevant law. With regard to the statute of limitations, she includes allegations that FINRA used search engine optimization tools to control how the arbitration award was indexed by Google search, and that some of those actions were taken within the 1 year statute of limitations. With regards to immunity, she alleges that, “The Award as posted was prepared by FINRA, not the Panel.”

My guess is that most practicing attorneys would do a better job drafting the Complaint, and a few would do worse. It does appear, though, that all of the attorneys she consulted told her that she didn't have a winning case, and she refused to believe them. So, score one for the attorneys.

[myself]

I certainly understand the problem with allowing people who seek arbitration (who are on average, more litigious) to sue the arbitrators.

But I think there's still an issue where if you're subject to an errant judicial decision you can appeal the ruling. While the libelous statement won't be stricken from the record it can be "corrected" by the higher court.

Since arbitration doesn't always allow for an appeal, if the arbitrator makes an errant ruling, even one that defames you in a factually incorrect manner, there's no way to correct the record.

[hoppy025]

Which would be fine with me if arbitration clauses were unenforceable. But since they’re not, it’s not. People should have to voluntarily consent to arbitration for each individual time, and corporate contracts of adhesion should not be able to force it on individual plaintiffs.

[Peter Gerdes]

Worse, I don't see language limiting the immunity to the parties to the arbitration. The arbiter could have libeled anyone, or maybe even leaked classified documents and this reasoning would seem to grant them immunity.

[David Nieporent]

Leaking classified documents is a criminal offense, not a civil one, and immunity does not apply.

[Bored Lawyer]

The limitation is not who might be the target of defamation, but whether the judge or arbitrator is acting in his official capacity. Writing a decision about the facts of the case is well within that capacity, and is immune, regardless of whether the person written about negatively is a party or someone else.
If it were a gratuitous swipe at someone with no connection to the case, then arguably it is outside that capacity.
Same for leaking what is supposed to be a confidential decision.

[hoppy025]

https://www.cnn.com/2023/09/05/politics/enrique-tarrio-sentencing-proud-boys-seditious-conspiracy/index.html

The judges aren't even pretending we're not a banana republic anymore.

[Michael Ejercito]

What is your issue with the conviction and sentence?

[hoppy025]

Because he didn't do anything. He wasn't even there. The judges are unjustly punishing him because he's a conservative. Period.

[myself]

He was the leader of the organization that led the attack on the Capitol, and remained in contacts with them during the attack. If that's not seditious conspiracy I don't know what is.

Oh, and as to him not being there.

Tarrio had been arrested in Washington, DC, days before the riot for burning a DC church’s Black Lives Matter banner and bringing high-capacity rifle magazines into the district, and was ordered by a judge to leave the city.

I guess I give him a little credit for not defying judge's orders and reentering the city.

[hoppy025]

Oh noes! He brought gun magazines, which are constitutionally protected, regardless of what fat whining women may claim, into D.C.! If his sentence took that into account, it's constitutionally impermissible. But you know that

[myself]

Oh noes! He brought gun magazines, which are constitutionally protected, regardless of what fat whining women may claim, into D.C.!

Well the courts disagree with you, even when the lawyers had better arguments than random sexism.

If his sentence took that into account, it’s constitutionally impermissible. But you know that

Just over the course of your comment your constitutional analysis ain't holding up so well.

I don't actually know if the high-capacity magazines factored into this sentence, it was more the point that he hadn't simply decided to sit out the riot at home. He fully intended to be at the capitol on Jan 6th but got arrested beforehand.

[David Nieporent]

Troll hoppy isn't even smart enough to come up with his own arguments; he's just repeating the MAGA talking point found all over the Internet that Tarrio "wasn't even there," as if the leader of a conspiracy must be in the room when his co-conspirators act to be guilty. John Gotti probably wasn't in the room when the people he ordered killed got killed.

And, of course, the former Grassley aide Trump appointed judge is punishing Tarrio "because he's a conservative."

[BrianL.]

Charles Manson wasn't there when his followers killed Sharon Tate, and the other people there, but he was still convicted of murder. Do you have a problem with that?

[Soronel Haetir]

Actually, I, for one, do. I see Manson in a very different light from a contract killer doing it for money. That his crazed followers chose to give his rambling thoughts any weight is on them, not him..

[Reallynotbob]

"Will no one rid me of this turbulent priest?"

[Peter Gerdes]

This isn't about being conservative. It's about being notices by the US criminal justice system. The courts are doing what they've always done in criminal cases: let the government charge you with super broad and often fairly vague laws, link your conduct to the crimes of others and then throw it at a confused jury who will just decide if they think you behaved badly.

At least this guy plausibly did bad things. People get thrown in prison all the time for far more sympathetic behavior.

[ReaderY]

While private arbitrators may get immunity from libel, it’s not clear to me that they should get absolute immunity from everything. What if, on one of these The Very Big Company Chooses the Arbitrators contracts, the plaintiff can prove the arbitrators colluded with The Very Big Company to side with it regardless of the evidence?

[Reallynotbob]

Good news — that is precisely one of the grounds on which one can appeal an arbitration award under the FAA.

https://www.jamsadr.com/files/uploads/documents/grafstein_appeal-arbitration-award_law360_2015-01-28.pdf

[Andrew Dhuey]

"The Court can make out the following from Seltzer's allegations."

IOW, I tried. I really tried to give this plaintiff a fair shake in my court.

Good on you, Judge Cobb for trying, and for taking this pro se plaintiff seriously (however weak her claim is).

[Peter Gerdes]

This seems like a loophole waiting to be exploited. The requirements to become an arbiter are pretty damn low (just bachelors degree in some states) and this rule doesn't seem to limit the immunity to suit only to the parties involve. Hell, it seems like you could leverage this immunity to publish classified material, grand jury testimony etc etc..

Find a state with a minimal requirement to be an arbiter, get some people to bring an arbitration case to you that minimally relates to the person you want to defame. Defame/leak/whatever away.

[David Welker]

I am not persuaded that arbitrators should be considered immune from suit. If arbitrators want such immunity, they can write such immunity into their contracts with the parties.

Arbitrators are just another private person like any other.

[David Welker]

Oh, and another point. This statement by the court the the arbitrators have immunity is pure dicta.

Maybe these courts should recall that the reason they write judicial decisions is to resolve cases and controversies, not to provide non-binding dicta that then risk confusing subsequent lawyers and judges.

This court should have stopped right after it came to the statute of limitations issue.

[hoppy025]

The courts love arbitration clauses because it lessens their docket and helps big business. Anything the courts can do to encourage more arbitration, such as granting immunity, they will do.

[Eugene Volokh]

David Welker: (1) There's a good reason for district courts to provide alternate bases for their holdings, since that avoids the need for piecemeal appeals and the years-long delays they can cause. If the district court disposes of the case on issue A but doesn't reach issue B, then if the appellate court reverses on A the district court would have to render another decision on B, which would then be appealed again in turn.

(2) By providing such alternate bases, the court may avoid an appeal in the first place, since if the party (or its lawyer) may well be persuaded that it indeed has a losing case on one of the bases.

(3) District court decisions aren't binding precedent in any event, whether they are "dicta" or not. And it's not clear why the two bases for a decision would be likely to be "confusing" to "subsequent lawyers and judges" any more than one would.

[David Welker]

I appreciate you taking the time to respond. Your point about it being a federal district court is a good one.

But federal district courts can be cited as persuasive rather than binding authority. Of course, so can dicta. But I generally don't like dicta.

Your point about judicial economy is reasonable IF the issue on which they court rules is controversial enough to be reasonably appealable.

I haven’t looked into this particular statute of limitations issue to see if there is a complicated tolling issue or something like that lurking about. Statute of limitations issues can sometimes get murky. But if the statute of limitations decision is pretty straightforward, I think the court should stick with just what is needed to dispose of the case.

Also, I try to be fair. Although I dislike the opinion of the district court (why should a private party ever get immunity that they could just write into a contract… and I am already skeptical of immunity for government officials), the principle that a court should stick to narrow rulings rather than engage in legal speculation is one I would hold even for rulings I agree with.

[Mr. Bumble]

Are FINRA's actions even legal?
https://nclalegal.org/2023/09/ncla-amicus-brief-asks-appeals-court-to-topple-finras-illegal-private-enforcement-regime/

[tkamenick]

I mean, everyone is immune from libel suits for their opinions.